Despite the equity markets remaining volatile for the most part of the calender year 2015, mutual funds continued to attract investors. The Indian mutual fund industry witness inflows, especially into equity funds, while there was a rise of more than 13% in the number of folios for the year.
Positive returns from equity funds compared with benchmark indices, coupled with changing mindset of retail investors and success of investor awareness programmes, can be attributed to the rise in folios. The latest data from Sebi shows that the mutual fund industry added 55.76 lakh folios in CY 2015. Total folios for the entire mutual fund industry stood at 4.58 crore as on December 2015, compared with 4.02 crore in December 2014.
Equity-oriented schemes saw the folio rise by 43.2 lakh during the last calender year. At the end of December 2015, total folios of equity-oriented schemes stood at at 3.47 crore, shows the latest data from Sebi.
In the last few years, there has been a consistent rise in the number of folios in equity funds. However, since March 2014, equity funds have continued to see huge increase in folios. The data from Sebi also shows that total equity folios as on March 2014 was 2.91 crore and that rose to 3.16 crore in March 2015.
Dinesh Kumar Khara, MD and CEO at SBI Asset Management Company (AMC), said, “If we look at equity as an asset class it has given better returns, so people have shown their faith in equity mutual funds. I would also like to add that various investor education awareness initiative and increase in systematic investment plan book has also helped the industry.”
Not only equity fund, even income- and debt-oriented schemes saw rise in folios. Total folios in income and debt oriented schemes for December 2014 was at 71.25 lakh which rose to 79.51 lakh in December 2015, surge of 8.26 lakh folios.
In the 2015 calendar year, equity funds (which include equity, equity-linked saving schemes and other ETFs) had seen net inflows of Rs 96,389 crore. Over the past few years, volatile markets and lack of incentives for distributors had seen mutual funds register net redemption. In 2012 and 2013, equity schemes saw outflows of Rs 15,133 crore and Rs 10,660 crore, respectively. But with equity markets on the rise and steps taken by the industry as well as Sebi to ‘incentivise’ distributors, there seems to renewed enthusiasm for mutual funds.
Despite huge interest from investors in 2015, industry participants are watchful that current volatile scenario will lead to some redemption and that can be real test of the mutual fund industry to retain existing investors.